Number Crunch

Chip Shortage Woes Lead to Massive Reshoring Efforts

Intel makes a big bet on American manufacturing

$20 billion: That’s how much Intel is spending on two new semiconductor chip fabrication plants in the US. The fabs, both currently under construction just outside of Phoenix, AR, are expected to be fully operational by 2024.

The news is encouraging, but it does nothing in the short term to ease the persistent shortage of semiconductors.

The infamous “chip shortage” has made it more difficult to produce cars, appliances, phones, and even toothbrushes. Just one example: Toyota announced it will produce 40% fewer cars this month than expected due to the chip shortage and other supply chain issues.

While there are other companies that produce chips, most businesses rely on Taiwan Semiconductor Manufacturing Co (TMSC) and Samsung, located in Taiwan and South Korea, respectively. TMSC alone accounted for 54% of foundry revenue in 2020, and Samsung took home 17%.

Currently, just 12% of semiconductors are made in the US, down from roughly a third back in 1990.

Intel’s pivot into the foundry business is part of an effort to change that reliance on one or two offshore suppliers for a component that is critical…